Telstra’s Share Price Drops 3% as TPG Telecom Moves In

Telstra Corp Ltd [ASX:TLS] dropped 3.8% to a low a $4.00 per share this morning. The stock has fallen almost 22% year-to-date. The prospects for Australia’s biggest Telco aren’t looking too bright.

What happened to Telstra’s Share Price?

Recently, investors have been spooked over TPG Telecom Ltd’s [ASX:TPM] move to cut into Telstra’s mobile network.

TPG is planning to build its own network, according to The Australian Financial Review. TPG paid $1.26 billion for a slice of the 4G mobile spectrum, and will spend $600 million over three years building its own network.

And if competition lowers returns for Telstra, analysts at Montgomery Investment Management believe, ‘…the valuation of the businesses falls by more than just the reduction in earnings.

What now for TPG and Telstra?

Right now might not be the best time to jump into Telstra. Yes, the stock is depressed but, in the face of uncertainty, it’s hard to say if it has bottomed out yet.

TPG has said they plan to be very competitive on price. But it’s still unknown how many Aussies will switch over to TPG’s network.

For now, it might be worth looking at other potential investments while investors continue to push Telstra’s share price down.

Regards,

Härje Ronngard,

Junior Analyst, Money Morning

PS: Telstra is known for its huge dividend. The stock has a dividend yield of more than 7%. Now that’s pretty hard to beat. But there are other stock paying hefty dividends which aren’t trending down.

Income specialist, Matt Hibbard has been scouring the ASX to find the very best dividend stocks. In his research he decided to compile his finding into a report called ‘Top 5 Dividend Stocks in Australia for 2017’.

To get a free copy of Matt’s report, click here.


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